Uganda’s diverse economy to benefit from oil boom

In her latest mission to reveal the investment opportunities and challenges on the continent, 702’s Nikiwe Bikitsha confirmed what most business people, investors and entrepreneurs already know about East Africa in general, and Uganda in particular: the region is booming thanks to its rich resources and wise policies.

While exploring the country’s attractions, Nikiwe noticed that Uganda’s economy is comparatively diverse, if dominated by agriculture. Sectors of interest include financial services, telecommunications and manufacturing, for example. However, the award-winning journalist stresses that these industries are currently struggling with a “great deal” of under-investment. Fortunately, this should be remedied by the discovery of oil.

In 2006, commercial-grade petroleum was discovered off Uganda’s Lake Albert. In anticipation of the coming oil boom, the government has facilitated a huge infrastructure drive to support the transport of this precious resource, which is now having a positive impact on some industries. For instance, Nikiwe interviewed Maria Namusoke of Markh Investments (a transport and logistics company whose main client is Lefarge), who says the recent public investment in infrastructure has boosted growth commercial development, subsequently increasing opportunities for her company.

Staying on the topic of infrastructure, Stanbic Bank Uganda CEO Patrick Mweheire revealed that, so far, the Ugandan government has spent USD2.5 billion on the construction of two hydropower stations. But these were built by Chinese companies, and less than 10% of public spending went to local players. In readying for the coming spending boom (which could reach USD1.5 billion), Mr Mweheire cautions that the government must ensure that local businesses benefit.

It seems, however, that the Ugandan government is keeping the economic participation of its people in mind. According to Gerald Mukyenga, Advisor to the Uganda Chamber of Mines and Petroleum Board, many sectors have been “ring-fenced” through local policies, protectionist laws and education drives. Mr Mukyenga believes that every Ugandan, directly or indirectly, will benefit from the oil discovery.

Tourism is another sector in which Uganda could experience a boom - if investment is prioritised. Situated in the Great Lakes region, the East African country offers many magnificent geological sites over and above its wildlife parks. Eric Ntalo, Public Relations Officer at the Ugandan National Museum, shares that tourism contributes up to 9% to the GDP. Yet, Uganda is surrounded by countries that offer similar attractions (Rwanda and Kenya, for example) and that have the budget to tell their tourism story. Furthermore, Uganda doesn’t have its own national carrier, making it harder and more expensive to travel to the country.

One more area that could benefit from increased investment is agriculture. Though it is the economy’s biggest sector, former Agriculture Minister Victoria Sekitoleko insists that it needs more attention in terms of budget. Possessing 60% of East Africa’s arable land, Uganda has the potential to be a “bread basket” for sub-Saharan Africa.

“The agricultural sector is not only important to Uganda, but to Africa,” says Ms Sekitoleko. “Our sovereignty depends on our ability to feed ourselves.”